Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
Remember Europe? It used to be important.
As we watch in sorrow and amazement, the great European nations slowly fade into a distant memory, hung on their own petard, the euro. All those once-viable, once-powerful nations, melting, melting like the Wicked Witch of the West.
There is Greece:
Greece: Austerity Bill Passed, Despite Protests
Huff Post, Nicholas Paphitis and Derek Gatopoulos 10/20/11
ATHENS, Greece — Greek lawmakers passed a deeply resented new austerity bill Thursday, caving in to the demands of international creditors in order to avoid a national bankruptcy, as a second day of riots left one protester dead and more than 100 people wounded.
The austerity measures won 154-144 in the 300-member parliament despite dissent from a prominent Socialist lawmaker who voted against a key article of the bill. The vote was expected to pave the way for a vital euro8 billion ($11 billion) payout from creditors within weeks so Greece can stay solvent.
Uncertainty over Italy’s future slams markets
Markets’ Berlusconi rally proves short-lived as Italian borrowing rates again spike higher
Pan Pylas, AP Business Writer, On Wednesday November 9, 2011
LONDON (AP) — Uncertainty over who will lead Italy through the debt crisis once Premier Silvio Berlusconi resigns slammed European stocks and bonds on Wednesday, pushing Rome’s borrowing rates to worrying new highs.
Tuesday’s news that Berlusconi had finally bowed to pressure and would resign once new austerity measures are passed had helped markets in the U.S. and Asia higher. Berlusconi had been perceived as part of the problem in the political deadlock gripping Italy.
Spain and the euro crisis
A great burden for Zapatero to bear
The Spanish prime minister has become a reluctant convert to reform—but maybe too little, too late
Jan 20th 2011 | MADRID | The Economist
José Luis Rodríguez Zapatero, the Spanish prime minister . . . said,“There is something worse than the lack of a broad consensus about how to implement reforms and that is, especially at this moment in time, a lack of reform.”
Spain’s road to recovery is still fraught with dangers. [...] The need for reform and austerity is urgent. As Portugal teeters on the verge of a bail-out, Spain yo-yos anxiously. It has just had to pay a steep 5.5% on a €6 billion ($8 billion) syndicated bond. Spain’s fellow euro members are looking for broader solutions to their sovereign-debt crisis, in which Spain (by virtue of its size) is by far the biggest risk.
Elena Salgado, the finance minister, trimmed the budget deficit from 11.1% of GDP in 2009 to under 9.3% in 2010. She aims to get it to 6% this year. Spain’s national debt is below the euro-zone average and less than America’s and Britain’s.
The government has dragged its feet on reform in the past. A so-called sustainable economy law, which Mr Zapatero announced in May 2009, is still stuck in parliament.
Financial Times, October 13, 2011
Portugal announces more austerity measures
By Peter Wise in Lisbon
Portuguese employees will have to work longer, lose bank holidays and forfeit more than a month’s wages in holiday bonuses to combat pressures to leave the euro, the prime minister announced on Thursday night.
In a televised address to the nation, Pedro Passos Coelho outlined the country’s toughest austerity package to date in an effort to avert what he described as a “national emergency”.
Ireland Plans 12.4 Billion Euros of Austerity Through 2015
Bloomberg, By Finbarr Flynn and Joe Brennan – Nov 4, 2011 11:51 AM CT
Ireland plans 12.4 billion euros ($17.1 billion) of austerity measures over the next four years as it pushes on with a fiscal program to reduce the deficit and insulate it from the crisis in Greece.
There is “no easy path forward,” Finance Minister Michael Noonan said in Dublin today as he published the government’s Medium-Term Fiscal Statement. He is planning a 3.8 billion-euro adjustment in 2012 after a 6 billion-euro budget in 2011. The government also cut its 2012 growth forecast to 1.6 percent from 2.5 percent.
A quote, variously attributed to Albert Einstein, Rita Mae Brown or Narcotics Anonymous, is apt here: “Insanity is doing the same thing over and over again but expecting different results.” Every euro nation believes its salvation comes from reduced government spending combined with increased government taxes, in short, reduced deficits – in short, austerity.
That fact that a reduced deficit – austerity — never has saved an economy, cannot save an economy and always will lead to economic disaster, does not seem to trouble the economists who preach it again and again.
Austerity is ignorance. Austerity is poverty. Austerity is a depression. Austerity is misery for a nation’s citizens, their children and their grandchildren, far into the future. Austerity is a trip to third-world status, or worse. Austerity is bleeding a patient to cure his anemia.
Deficit reduction cannot save Europe. Even were deficits reduced to zero, the euro’s fundamental weakness would continue: Monetarily non-sovereign nations, being unable to create unlimited money, cannot survive long-term without money coming in from outside their borders. This is an absolute law in economics.
There is no magical, long-term solution. No amount of deficit reduction, no amount of austerity will save monetarily non-sovereign nations. Austerity is insanity and death.
And austerity is the goal of America’s Congress and President and the special committee to reduce the deficit.
I award 5 dunce caps to all those who believe reduced government deficits will stimulate economic growth, reduce unemployment and save a country from recession.
(I now am running a 1070 dunce cap deficit. Yet I feel no need for austerity. Fear not. I have plenty of dunce caps I can award to politicians, media, economists and the Tea Party.)
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings